1.

DIFFERENT KINDS OF OBLIGATIONS

©2016 ATTY. RAPHAEL JAMES DIZON
Photo by JD Hancock
2.

DIFFERENT KINDS OF OBLIGATIONS

CHAPTER 3
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3.

PURE OBLIGATION
 Art. 1179. Every obligation whose performance does not depend upon a future or uncertain event,
or upon a past event unknown to the parties, is demandable at once.

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4.

CONDITIONAL OBLIGATION
 Every obligation which contains a resolutory condition shall also be demandable, without
prejudice to the effects of the happening of the event.

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5.

CONDITION
 a future and uncertain fact or event upon which an obligation is subordinated or made to depend.

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6.

CONDITIONAL OBLIGATION
 one whose effectivity is subordinated to the fulfillment or nonfulfillment of a future and uncertain
fact or event.
Photo by Chris & Angela Pye
7.

CLASSIFICATION OF CONDITIONS
 Suspensive — when the fulfillment of the condition results in the acquisition of rights arising out
of the obligation.

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8.

CLASSIFICATION OF CONDITIONS
 Resolutory — when the fulfillment of the condition results in the extinguishment of rights arising
out of the obligation.

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9.

CLASSIFICATION OF CONDITIONS
 Potestative
 Casual
 Mixed

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10.

CLASSIFICATION OF CONDITIONS
 Conjunctive — when there are several conditions, all of which must be realized.
 Alternative — when there are several conditions, but only one must be realized.

Photo by Thomas Hawk

11.

Art. 1181. In conditional obligations, the acquisition of

rights, as well as the extinguishment or loss of those already
acquired, shall depend upon the happening of the event
which constitutes the condition.
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12.

SUSPENSIVE CONDITION
 If A obligates himself to give to B P100,000 if the latter gets married to C, the condition is
suspensive in character. In such case, B cannot acquire the P100,000 unless he gets married to C.

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13.

SUSPENSIVE CONDITION
 If X obligates himself to give to Y a certain house and lot if the latter passes the bar examinations
in his first attempt, the condition is also suspensive in character.

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14.

RESOLUTORY CONDITION
 If a person donates a parcel of land to the City of Manila subject to the condition that the City
shall transform it into a public park within a period of one year from the time of the perfection of
the donation, the condition which is imposed is resolutory in character.

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15.

RESOLUTORY CONDITION
 If the City fails to transform the land into a public park within the stipulated period, the rights
which it acquired over the land as a result of the donation are resolved or extinguished altogether.

Photo by WanderingtheWorld (www.ChrisFord.com)

16.

RESOLUTORY CONDITION
 If a person sells a parcel of land with right of repurchase. Once the sale with pacto de retro is
perfected, the vendee a retro becomes the owner of the property.

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17.
RESOLUTORY CONDITION
 However, his right is not absolute in character because it may be extinguished or lost if the
vendor a retro exercises his right of repurchase within the legal or stipulated period of
redemption.

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18.

Art. 1182. When the fulfillment of the condition depends

upon the sole will of the debtor, the conditional obligation
shall be void. If it depends upon chance or upon the will of a
third person, the obligation shall take effect in conformity
with the provisions of this Code.
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19.

POTESTATIVE CONDITION
 A distinction must be made between the effects of a potestative condition whose fulfillment
depends exclusively upon the will of the creditor and the effects of one whose fulfillment depends
exclusively upon the will of the debtor.

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20.

POTESTATIVE CONDITION
 In the first the condition as well as the obligation is valid, while in the second not only the
condition, but even the obligation itself, is void.

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21.

POTESTATIVE CONDITION
 Art. 1182 is applicable only to a suspensive condition.
 Hence, if the condition is resolutory and, at the same time, potestative, the obligation, as well as
the condition, is valid even though the fulfillment of the condition is made to depend upon the
sole will of the obligor or debtor.
Photo by Miradortigre
22.

CASUAL CONDITION
 If the obligor promises to deliver his automobile to the obligee if a certain candidate is elected to
the position of President of the Philippines in 2016, the obligation is valid because it is evident
that the fulfillment of the condition to which it is subject depends upon the will of others.

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23.

MIXED CONDITION
 Where the debtor promises to pay his debts to the creditor as soon as he shall have received funds
derived from the sale of his house, it was held that the fulfillment of the condition depends partly
upon the will of the debtor and partly upon the will of third persons, as a consequence of which it
is perfectly valid and enforceable.

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24.

Art. 1183. Impossible conditions, those contrary to good

customs or public policy and those prohibited by law shall
annul the obligation which depends upon them. If the
obligation is divisible, that part thereof which is not affected
by the impossible or unlawful condition shall be valid.
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25.

The condition not to do an impossible thing shall be

considered as not having been agreed upon.
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26.

IMPOSSIBLE CONDITION
 If A obligates himself to pay to B P10,000 if the latter can contract the inhabitants of Mars, the
obligation is a nullity because the condition is impossible.
Photo by Benjamin Godard Photography
27.

IMPOSSIBLE CONDITION
 If C promises to give to D a parcel of land if the latter secures a divorce from his wife, the
obligation is also a nullity because the condition is contrary to law, good customs and public
policy.

Photo by Scooter Lowrimore

28.

IMPOSSIBLE CONDITION
 If E binds himself to deliver to F an automobile if the latter will go with him around the world on
a trial honeymoon, the obligation is certainly void because the condition is contrary to good
customs.

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29.

IMPOSSIBLE CONDITION
 If A and B enter into an agreement whereby the A binds himself to give P5,000 to the B in two
equal installments — the first installment to be given if the latter is able to sell drugs belonging to
A and the second installment to be given if the B gets married to C...
 since the obligation is divisible, the second part which is not affected by the unlawful condition
shall be valid.

Photo by Pavel P.
30.

IMPOSSIBLE CONDITION
 Attention must also be called to the fact that there is a difference with respect to effect between a
condition which is impossible, illegal, inappropriate or illicit when it is attached to an obligation
and the same condition when it is attached to a simple or remuneratory donation or to a
testamentary disposition.

Photo by Thomas Hawk

31.
IMPOSSIBLE CONDITION
 In the first, the obligation itself is void, while in the second, the condition is considered as not
imposed, although the donation or testamentary disposition itself is valid.

Photo by Thomas Hawk

32.

Art. 1186. The condition shall be deemed fulfilled when the

obligor voluntarily prevents its fulfillment.
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33.

ARTICLE 1186
 The doctrine can be applied only to suspensive and not to resolutory conditions.

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34.

CASE
 Where the conditions which are imposed by a certain company in order that its employees will be
entitled to retirement benefits can no longer be complied with because the retirement or pension
plan was willfully abrogated by a unilateral act of the Board of Directors of the company, it was
held that such conditions are deemed complied with in conformity with Art. 1186.

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35.

CASE
 Consequently, such employees are now entitled to retirement benefits.

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36.
Art. 1187. The effects of a conditional obligation to give,
once the condition has been fulfilled, shall retroact to the day
of the constitution of the obligation.
37.

Nevertheless, when the obligation imposes reciprocal

prestations upon the parties, the fruits and interests during
the pendency of the condition shall be deemed to have been
mutually compensated.
38.

If the obligation is unilateral, the debtor shall appropriate

the fruits and interests received, unless from the nature and
circumstances of the obligation it should be inferred that the
intention of the person constituting the same was different.
39.

PROBLEM
 Before the war, the Phil. Long Distance Co. (PLDT) adopted a pension plan for its employees by
virtue of which all employees who have reached the age of 50 years and who have rendered 20
years or more service may be retired with a pension. After the war, the Board of Directors of the
Company passed a resolution abrogating the pension plan.

40.
PROBLEM
 Subsequently, sixty employees who were affected filed a complaint against the Company
claiming monetary benefits under the pension plan.

41.
PROBLEM
 The Company interposed the following defenses: (1) that the obligation to pay a pension to the
plaintiffs is subject to certain suspensive conditions; consequently, such plaintiffs have no
personality to ask for monetary benefits until after such conditions are fulfilled;

42.
PROBLEM
 (2) that even granting without admitting that they have, they are not entitled to such benefits until
after the conditions are fulfilled;
 and (3) that war losses had extinguished the Company’s obligation to proceed with the pension
plan.

43.
ANSWER
 The 1st defense is untenable. While it is true that when an obligation is subject to a suspensive
condition, what is acquired by the creditor is only a mere hope or expectancy, nevertheless, it is a
hope or expectancy that is protected by the law.

44.
ANSWER
 The second defense is untenable. According to Art. 1186 of the NCC, the condition shall be
deemed fulfilled when the obligor voluntarily prevents its fulfillment. The act of the Board of
Directors of the Phil. Long Distance Co. in abrogating the pension plan certainly falls within the
sphere or purview of this rule.

45.
ANSWER
 The third defense is also untenable. This is so because the defense of fortuitous event is available
only if the obligation is determinate and not if the obligation is generic. Here, the obligation is
clearly generic since it involves the payment of money.

46.
ARTICLE 1187
 If A had obligated himself to sell a certain parcel of land to B for P100,000 subject to a condition
of a suspensive character, and such condition was fulfilled two years after the perfection of the
contract...

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47.

ARTICLE 1187
 a literal application of the principle of retroactivity would have the effect of compelling A to
deliver to B not only the land, but also all of the fruits which he may have gathered or received
 therefrom during the period from the time of the perfection of the contract to the time of the
fulfillment of the condition;

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48.

ARTICLE 1187
 and as far as B is concerned, it would have the effect of compelling him to pay to A not only the
P100,000, but also the interest thereon during the same period.

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49.

ARTICLE 1187
 But because of the reciprocal character of the obligation, the law, as a matter of justice and
convenience, considers the fruits and interests as the equivalent of each other.

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50.

IN OTHER WORDS
 They are deemed to compensate each other mutually.

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51.

UNILATERAL OBLIGATION
 If A had obligated himself to give to B a parcel of land if the latter gets married to C, and the
condition is fulfilled only after two years from the time of the constitution of the obligation, he
shall be obligated to deliver only the land and not the fruits which he may have gathered or
received therefrom during the pendency of the condition.

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52.

TO BE CONTINUED
©2016 ATTY. RAPHAEL JAMES DIZON
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53.

OBLIGATIONS with a PERIOD

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54.

Obligations with a period may be defined as those whose

demandability or extinguishment is subject to the expiration
of a term or period.
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55.

Distinguished from condition

56.

As to requisites
 While a term or period refers to an interval of time which is future and certain
 a condition refers to a fact or event which is future and uncertain.

57.
As to fulfillment
 While a term or period is an interval of time which must necessarily come, although it may not be
known when
 a condition is a future and uncertain fact or event which may or may not happen.

58.
As to influence on obligation
 While a term or period merely exerts an influence upon the time of the demandability or
extinguishment of an obligation
 a condition exerts an influence upon the very existence of the obligation itself.

59.
As to retroactivity of effects
 While a term or period does not have any retroactive effect unless there is an agreement to the
contrary
  a condition has retroactive effects

60.
As to effect of will of debtor
 When a term or period is left exclusively to the will of the debtor, the existence of the obligation
is not affected
 but when a condition is left exclusively to the will of the debtor, the very existence of the
obligation is affected.

61.
Classification of Term or Period
 Suspensive or resolutory
 Legal, conventional or judicial
 Definite or indefinite

62.
Effect of fortuitous event
 In obligations with a term or period, any stipulation in the contract to the effect that in case of a
fortuitous event the contract shall be deemed suspended during the term or period does not mean
that the happening of the fortuitous event shall stop the running of the term or period agreed
upon.

Photo by W Mustafeez

63.

Effect of fortuitous event

 Its only effect is to relieve the contracting parties from the fulfillment of their respective
obligations during the term or period.

Photo by W Mustafeez

64.

Untitled Slide
65.

LOSSES
ARTICLE 1189
Photo by JMS2
66.

A THING IS LOST
 when it perishes
 when it goes out of commerce
 when it disappears in such a way that its existence is unknown or it cannot be recovered

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67.

RULES ON LOSSES
 If the thing is lost without the fault of the debtor, the obligation shall be extinguished

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68.

RULES ON LOSSES
 If the thing is lost through the fault of the debtor, he shall be obliged to pay damages

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69.

RULES ON LOSSES
 When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the
creditor

Photo by renê ardanuy on/off

70.

RULES ON LOSSES
 If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of
the obligation and its fulfillment, with indemnity for damages in either case

Photo by Dean Hochman

71.
RULES ON LOSSES
 If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of
the obligation and its fulfillment, with indemnity for damages in either case

Photo by Dean Hochman

72.

RULES ON LOSSES
 If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the
creditor

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73.

RULES ON LOSSES
 If it is improved at the expense of the debtor, he shall have no other right than that granted to the
usufructuary.

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74.

Art. 1197. If the obligation does not fix a period, but from its
nature and the circumstances, it can be inferred that a
period was intended, the courts may fix the duration thereof.
Photo by jseft
75.

The courts shall also fix the duration of the period when it
depends upon the will of the debtor.
Photo by jseft
76.

Untitled Slide
77.
PROBLEM
 D borrowed P2,000 from C in 2010. The debt is evidenced by a promissory note executed by D
wherein he promised to pay as soon as he has money or as soon as possible. C has made repeated
demands upon D for payment, but up to now no payment has been made. Suppose that C will
bring an action against D for payment of the debt, will the action prosper?

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78.

Art. 1198. The debtor shall lose every right to make use of
the period:
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79.

(1) When after the obligation has been contracted, he

becomes insolvent, unless he give a guaranty or security for
the debt
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80.

(2) When he does not furnish to the creditor the guaranties

or securities which he has promised
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81.

(3) When by his own acts he has impaired said guaranties or

securities after their establishment, and when through a
fortuitous event they disappear, unless he immediately gives
new ones equally satisfactory
Photo by Brian Negus
82.
(4) When the debtor violates any undertaking, in
consideration of which the creditor agreed to the period
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83.

(5) When the debtor attempts to abscond

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84.

Alternative and Facultative Obligations

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85.

When an obligation comprehends several objects

 conjunctive - when all of the objects or prestations are demandable at the same time
 distributive - when only one is demandable

Photo by KaylaKandzorra
86.

DISTRIBUTIVE
 ALTERNATIVE - when it comprehends several objects or prestations which are due, but it may
be complied with by the delivery or performance of only one of them

Photo by dno1967b
87.

DISTRIBUTIVE
 FACULTATIVE - when it comprehends only one object or prestation which is due, but it may be
complied with by the delivery of another object or the performance of another prestation in
substitution

Photo by dno1967b
88.
FACULTATIVE vs. ALTERNATIVE
89.

As to objects due
 In facultative obligations only one object is due, while in alternative obligations several objects
are due.

90.
As to compliance
 Facultative obligations may be complied with by the delivery of another object or by the
performance of another prestation in substitution of that which is due, while alternative
obligations may be complied with by the delivery of one of the objects or by the performance of
one of the prestations which are alternatively due.

91.
As to choice
 In the first, the right of choice pertains only to the debtor, while in the second, the right of choice
may pertain even to the creditor or to a third person.

92.
As to the effect of fortuitous loss
 In the first, the loss or impossibility of the object or prestation which is due without any fault of
the debtor is sufficient to extinguish the obligation, while in the second, the loss or impossibility
of all of the objects or prestations which are due without any fault of the debtor is necessary to
extinguish the obligation.

93.
As to effect of culpable loss
 In the first, the culpable loss of the object which the debtor may deliver in substitution before the
substitution is effected does not give rise to any liability on the part of such debtor; in the second,
the culpable loss of any of the objects which are alternatively due before the choice is made may
give rise to a liability on the part of the debtor.

94.
Joint and Solidary Obligations
Photo by miss.libertine
95.

Joint and Solidary Obligations

 When there is a concurrence of two or more creditors or of two or more debtors in one and the
same obligation, the obligation may be either joint (obligación mancomunada) or solidary
(obligación solidaria).

Photo by LibDescent descent dover

96.

JOINT OBLIGATION
 an obligation where there is a concurrence of several creditors, or of several debtors, or of several
creditors and debtors, by virtue of which each of the creditors has a right to demand, and each of
the debtors is bound to render, compliance with his proportionate part of the prestation which
constitutes the object of the obligation

Photo by LimarieC
97.

SOLIDARY OBLIGATION
 an obligation where there is a concurrence of several creditors, or of several debtors, or of several
creditors and several debtors, by virtue of which each of the creditors has a right to demand, and
each of the debtors is bound to render, entire compliance with the prestation which constitutes the
object of the obligation

Photo by idea ablaze

98.

GENERAL RULE
 An obligation is presumed to be JOINT.

Photo by Scott*
99.

EXCEPTIONS
 when the obligation expressly states that there is solidarity
 when the law requires solidarity
 when the nature of the obligation requires solidarity
Photo by JBrazito
100.

Thus, where the debtors agreed to pay the obligation “jointly

and severally,”or “individually and collectively”everyone of
them can be held responsible for the payment of the entire
obligation.
Photo by kenteegardin
101.

PROBLEM
 A, B, and C executed a promissory note binding themselves to pay P9,000 to X, Y, and Z. The
note is now due and demandable.

102.
QUESTIONS
 Can the creditors proceed against A alone for payment of the entire obligation? Why?
 Can X alone proceed against A, B and C for payment of the entire obligation? Why?

103.
QUESTIONS
 Suppose that X proceeds against A alone for payment, how much can he collect? Why?
 Suppose that C is insolvent, can A and B be held liable for his share in the obligations? Why?

104.
QUESTIONS
 Suppose that the obligation was about to prescribe, but X wrote a letter to A demanding for
payment of the entire debt, will this have the effect of interrupting the running of the period of
prescription? Why?

105.
ANSWERS
 (a) The creditors cannot proceed against A alone for the payment of the entire obligation. Since
the promissory note is silent with respect to the right of the creditors as well as the liability of the
debtors, the obligation is, therefore, presumed to be joint.
Photo by Thomas Hawk
106.

ANSWERS
 (b) X alone cannot proceed against A, B and C for the payment of the entire obligation for the
same reason stated in the previous paragraph. The most that he will be able to collect from the
three debtors will be his proportionate share in the obligation which is P3,000.

Photo by Thomas Hawk

107.

ANSWERS
 (c) If X proceeds against A alone for payment, the most that he will be able to collect will be only
P1,000.

Photo by Thomas Hawk

108.

ANSWERS
 (d) If C is insolvent, his co-debtors cannot be held liable for his share in the obligations. This
necessarily follows from the principle that in joint obligation, the credit or debt shall be presumed
to be divided into as many equal shares as there are creditors or debtors, the credits or debts being
considered distinct from one another.

Photo by Thomas Hawk

109.

ANSWERS
 (e) The demand made by X upon A, for the purpose of interrupting the running of the period of
prescription, shall prejudice the latter only, but not the other debtors. Consequently, if after ten
years, X, Y and Z should bring an action against A, B and C to collect the debt, the defense of
prescription would be absolute insofar as B and C are concerned, but partial insofar as A is
concerned.